As a consumer with seemingly endless options, what compels you to choose one brand over another?
You probably think your decisions are driven by the products and services offered by a particular company–but what’s really leading you to purchase from, recommend, and stay loyal that brand is its reputation.
According to Reputation Institute, a global private consulting firm based in New York, reputation is the emotional bond that companies have with stakeholders. “It’s defined by the level of trust, admiration, respect and good feeling stakeholders have towards a company,” says Anthony Johndrow, a managing partner at the firm.
Johndrow says he is seeing the enterprise play a growing role in driving consumers’ decisions and behaviors. “Greater access to and demand for information about the companies behind products is changing the way consumers relate to companies,” he says. “Similarly, there is increasing focus on aspects beyond products and services. Consumers are more and more interested in issues such as transparency, corporate governance and social responsibility.”
Reputation Institute found that 55% of consumers would definitely buy products from companies with strong reputations; and 59% would be willing to say something positive to others about it. Meanwhile, for companies with weak reputations, only 7% are willing to recommend them. “We live in a time when word of mouth is the number one driver of sales and competitive advantage,” he says. “Investing in reputation will pay off on the bottom line.”
Johndrow says many corporate leaders are beginning to understand why reputation is emerging as the No. 1 driver of value, and how crucial is it to their businesses. “They understand that people care about more than just the products they make. To deal with this new marketplace reality, companies need to build the capability to tell a broader story – more about who they are than what they sell.”
To find out which U.S. corporations are doing this particularly well, Reputation Institute conducted an online study among 4,719 consumers to measure their perceptions of the 150 largest companies that they were “somewhat” or “very” familiar with. Each company earned a “RepTrak Pulse” score of 0 to 100, representing an average measure of people’s feelings–or reputation–for a company. The scores were statistically derived from four emotional indicators: trust, esteem, admiration, and good feeling.
Reputation Institute then analyzed what it calls the seven dimensions of corporate reputation. That’s where it found that perceptions of the enterprise (workplace, governance, citizenship, financial performance and leadership) trumped product perceptions (products and services plus innovation) in driving behaviors.
Here are the top 10 most reputable companies. For the full list click through to Forbes
2013 Pulse Score: 76.66 Change from 2012: 2.43
2013 Pulse Score: 76.91 Change from 2012: -1.20
2013 Pulse Score: 77.16 Change from 2012: 1.12
2013 Pulse Score: 77.61 Change from 2012: -5.42
2013 Pulse Score: 79.43 Change from 2012: -0.56
2013 Pulse Score: 79.58 Change from 2012: 1.15
2013 Pulse Score: 79.59 Change from 2012: -0.46
2013 Pulse Score: 79.95 Change from 2012: 1.31
2013 Pulse Score: 80.05 Change from 2012: 6.82
2013 Pulse Score: 80.75 Change from 2012: 5.07
As it turned out, The Walt Disney Company blew everyone else out of the water this year. The information and mass media giant’s score totaled 80.75, which was 5.07 points higher than last year. Disney—which is back on the top 10 list after falling off in 2012—earned its No. 1 rank by performing strongly in all of the dimensions that influence reputation. It led the pack in every category except “products,” in which it earned the second highest score. In 2012 the 90-year-old Burbank, Calif.-based company held the No. 17 spot.
“Disney rebounded to an ‘excellent’ Pulse score in 2013, after dropping to ‘average’ last year,” Johndrow explains. “Consumers’ rational connection with Disney has been largely stable, and perceptions of the company’s performance on governance improved significantly in 2013. Compared with peers such as Time Warner and Google, Walt Disney outperformed across all dimensions of reputation with the biggest leads being in governance and citizenship, two key drivers of reputation.”
A spokesperson for the company says: “As one of the world’s best known companies, we continually strive to earn the respect of our consumers, our employees and our shareholders not only for what we achieve, but for how we do it. A great reputation is a reflection of the quality and integrity of a company’s people and products and we are extremely proud of both.”
No. 2 Intel also returned to the top 10 list this year. The tech firm earned a score of 80.05—jumping 6.82 points and 28 spots from 2012. It ranked among the top 5 in four of the seven dimensions.
“Consumers’ rational connection with the company has been largely stable,” Johndrow says. “Compared with peers, Intel does very well in products, governance and performance – two of three key drivers of reputation,” he adds. “Intel also outperforms in innovation, citizenship and leadership.”
Paul Bergevin, vice president of global communications at Intel, says a company’s reputation is a corporate asset, and protecting and enhancing that asset is a critical business need. “Over many decades, Intel has earned a strong reputation because our technology has created the backbone for new industries and changed and enhanced the quality of people’s lives,” he says. “But just as important to our reputation is our active and transparent commitment to corporate responsibility. As a global technology and business leader, we are committed to doing the right things, the right way. For Intel, that includes adhering to our long-held company values that emphasize integrity and building a great place to work, among others, and to our external work in education, the environment, and community engagement through volunteerism.”
Amazon took the No. 3 spot this year. The Seattle-based e-commerce behemoth earned a pulse score of 79.95—up 1.31 points from 2012, when it ranked 5th.
“Consumers seem to be rewarding Amazon for their exceptional customer focus,” Johndrow says. “The emotional connection [consumer have with the company] has remained high after making a leap in 2011 when it was the No. 1 most reputable company in the U.S.”
Amazon ranked among the top 5 in two of the seven dimensions. “Unsurprisingly, compared with peers, Amazon performs exceptionally well in innovation (No.2) and products (No. 1),” he says. The company also scores high, compared with the industry average, in governance, leadership and performance.
“This well-rounded strength in dimensions of reputation is necessary to sustain strong connections over time,” Johndrow adds. “A reputation built on service alone would not be enough.”
Deere & Co. and Dean Foods also joined the ranks of the top 10 this year, after building progressive gains since 2011. The four to fall off: No. 13 Procter & Gamble, No. 14 Kellogg’s, No. 24 Apple, and No. 35 PepsiCo. “Most of these are consumer packaged goods companies that traditionally do well,” Johndrow notes.
Overall, the transport and logistics, consumer products, industrial products, food manufacturing, and computer industries scored highest. At the other end of the spectrum, energy, telecommunications, banking firms and diversified financial companies earned the weakest scores.
“Not surprisingly, the majority of the bottom ranking companies are financial services firms–the likes of Fannie Mae, Freddie Mac, Bank of America, AIG and Goldman Sachs,” Johndrow says. Of the 30 companies that fall into this category, 19 rank in the bottom 50; 10 rank between 50 and 100; and only one, Berkshire Hathaway, ranks in the top 50.
The least reputable company on the list this year: Halliburton. In dead last, the oilfield services firm earned a pulse score of 32.01, which is 5.61 points less than last year.
The mortgage financiers Fannie Mae and Freddie Mac did only slightly better with 35.65 points and 37.35 points, respectively. However—the companies saw significant reputation gains this year.
Fannie Mae’s score increased by 6.14 points, while Freddie Mac was up a whopping 11.35 points. Others in the sector to see increases this year: Goldman Sachs and CitiGroup.
In 2012 AIG was the biggest gainer, when its score grew by about 16 points thanks to tangible progress on shifting perceptions of its ethics and transparency. But things went downhill again this year. As the fourth least reputable company in 2013, AIG’s score dropped 10.75 points to 39.17.
“Building a strong reputation takes time,” Johndrow says. “To earn trust and respect you need to consistently show that you will live up to your promises. To build a strong reputation companies need to deliver on these expectations through everyday work. But this is proving to be more and more difficult.”
Reputation management is a discipline that must be built into the way a company operates. “A great way to start is to bring consumers and other stakeholders ‘into the room’ with you when you make business decisions,” he concludes. “This is a mindset shift that can be helped by using analytical tools to connect stakeholder perceptions to business results.”Earlier this month Reputation Institute ranked the world’s most reputable companies. Forbes reported on that here.